Higher capital income tax delays selling shares and property
⚠ Disputed
Confidence: Low
Off by default
Shape: Proportional
Capital gains tax is only paid when an asset is sold. When the tax is raised, owners put off sales, so fewer gains are realised and the extra revenue falls short of the static estimate. A cut works the other way.
Disputed assumption – may not work this way in reality
Economists disagree whether this effect works, and how strongly.
That sales are delayed is well documented, but not how much: US estimates of the persistent elasticity range from about −0.5 to beyond −1, and the short-run response (selling before an increase) is bigger. There is no comparable estimate for Finland.
Of every 100 euros that a change to “Capital income taxes” saves or brings in, 30 € is lost as revenue on the line “Personal income tax” every year. (The other way round if the change adds spending or cuts taxes.)
E(t) = s × T(t)
Derived: elasticity −0.72 × capital gains' share of capital income tax about 40% (an estimate) ≈ −30%. Timing responses of dividends are not included.
Share of the change's own effect on the balance, year by year while the change continues: −15% means 15% of a saving comes back as cost (or 15% of extra revenue is lost). With the default values.
You can switch the effect on or off and adjust its assumptions in the simulator under Cause-and-effect chains.